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Operator
Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to Tuya's Inc's first quarter 2024 earnings conference call. My name is Faith and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad. I will now turn the call over to the first speaker today, Mr. Reg Chai, Investor Relations Director of Tuya. Please go ahead, sir.
Reg Chai
Okay. Thank you. Hello, everyone. Welcome to our first quarter 2024 earnings call. Joining us today are founder and CEO of Tuya, Ms. Jerry Wang, and our CFO, Ms. Jessie Liu. The first quarter 2024 financial results and the webcast of this conference call are available at ir.tuya.com. A replay of this call will also be available on our website in a few hours. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call, as we will make forward-looking statements. With that, I will now turn the call to our founder and CEO, Mr. Jerry Wong. Jerry will deliver his remarks in Chinese, which will be followed by corresponding English translation. 大家好,感谢大家参加虎牙2024年第一季度的业绩变化会议。 Hello everyone, thank you for joining our first quarter 2024 earnings conference call. Entering 2024, which marks the 10th anniversary of Tuya's founding, we are proud to have achieved significant milestones in the first quarter. Our total revenue grew by approximately 30% year-over-year, and our blended gross margin reached about 47.8%, setting a new historical high. Most noteworthy, for the first time ever, we achieved non-GAAP profitability in the first which is traditionally a remunerate period due to the Chinese New Year.
Tuya
Since the launch of the company in March 2021, we have experienced a lot of unprecedented external problems, and through the active and regular three-way adjustment and response, there have been a lot of changes in the business. We continue to build long-term partnership and expand the business of T&M. From the point of view of the customer and group that support T&M, We have developed our IoT PaaS business, which is more competitive in achieving device intelligentization, from the main support of customers four years ago, to the spatial intelligentization of industrial areas such as industrial hotels, community resorts, travel and energy, and so on, and further cross-reference the smart solution translation platform of PaaS, SaaS, and smart equipment in the Qubiclone market. Through Qubiclone,
Reg Chai
Since we went public in March 2021, we have navigated numerous unprecedented microeconomic events. Through proactive and ambitious strategic adjustments, we have driven significant qualitative transformations in our business. While achieving non-gap probability, we continue to build long-term competitive modes and extend total addressable market. From the perspective of the customers and scenarios supported and served by Tuya, we have evolved significantly over the past four years. Initially, our focus was on helping customers more efficiently and compatibly achieve device intelligence through our IoT path business. Today, we have expanded into spatial, intelligence solutions in industries such as apartments, hotels, community, parks, mobility, and energy. Furthermore, we have advanced to offering comprehensive smart solutions through a cloud platform that includes PARTS, SAS, and smart devices, including our smart cube cloud. This enables us to build enterprise-level intelligence platforms for global giants using cube cloud. As a result, our TAMP is now far larger.
Tuya
In the first quarter, we achieved a comprehensive recovery of the largest TAMP business. We continued to maintain the same trend of growth. This growth is mainly due to the recovery of overseas consumer electronics demand and the improvement of global smart demand. On the other hand, it is because of the increasing share in our market, mainly because of the increase in the number of new customers in the summer period of 2022 and 2023. We see that In the first quarter, we witnessed a comprehensive recovery in our largest revenue segment, the past business, maintaining a strong year-over-year growth trend
Reg Chai
This growth is attributed to two main factors. First is the recovery in overseas demand for consumer electronics and the steady increase in the global demand for smart solutions. Secondly, our market share is expanding as major competitors exited the market during the industry downturn from 2022 to 2023. More leading brands are transitioning Transitioning from in-house IoT development to our platform, we also continue to drive innovation through new product development, helping our brand customers quickly launch new smart products. These factors collectively contributed to our increasing market share.
Tuya
We observed that some new face-to-face developers and brand customers are making progress. We observed a new batch of developers and brand customers are streaming on cloud platform.
Reg Chai
Among them are Chinese e-commerce companies venturing overseas, which now possess stronger R&D and branding capabilities compared to four or five years ago. Additionally, well-known brands in North America, India and Europe are growing steadily under a more localization-focused service model. Our robust foundation of both new and exciting existing customers enable our growth rate to surpass the industry average.
Tuya
and software products such as NetZero to assist our partners in accelerating the era of low-carbon sales. In the last four years, we cooperated with the IFC of Brazil and VIVX, the main channel of VIVX, to cover the price increase of 87.2 million yuan. In the Central Asian region, we continued to innovate and break through the technology products of CubeClown in the telecommunications industry. In the first quarter,
Reg Chai
This year, in the European market, we responded to the French government's energy subsidy policy by securing orders for temperature control and energy saving smart devices solutions from French customers. We have integrated our solutions with two government-designated green energy technology platforms, and the value of initial orders is over $1 million. At the Frankfurt Lighting Fair in Germany, we showcase our innovative net-zero solutions with cutting-edge hardware and software products, helping our partners accelerate their transition to a low-carbon era. In the Latin American market, we have partnered with FibreX, a leading ISP channel in Brazil, whose downstream network ultimately covers millions of households across the country. In the Southeast Asia region, we continue to make breakthroughs in the telecom operator sector through cube cloud technology and product innovation. In the first quarter, several telecom operator group customers began deploying cube private cloud solutions, also comprehensive smart solution cooperation models.
Tuya
from overseas needs. By covering all the major regions around the world, we have been able to focus on the new business model developed by Siyu Yun and Siyu Jie to focus on the development of Asia-Pacific and Latin America regions outside of China. Since then, the supply and demand ratio has been the third consecutive year to show a rise. The main business of the global business team, which is more resilient and resilient than three years ago, we can clearly feel and capture the digitalization of various regions around the world.
Reg Chai
Overseas markets are approximately 83% of the total revenue, balanced across all major regions. Driven by our innovative business model of private cloud and smart solution, coupled with our customer focus approach, the Asia Pacific region outside of China and the Latin American region are growing rapidly. Their combined revenue demand contribution increased for the third consecutive year. This more balanced global business has made 2S operations more resilient and opportunities compared to three years ago. We are now more adept at sensing and capturing new smart technology trends worldwide, enabling us to better serve our global customers and support Chinese manufacturing enterprises in expanding overseas.
Tuya
Let's take a look at the product line first. Our consumer safety and transport products are growing rapidly across the industry. In the course of two good years in 2023, our large-scale home appliances products in the first quarter have a revenue contribution of about 75%. Among them, the smart air conditioner and air conditioner are growing at more than 100% under the guidance of the leading companies in the industry. The lighting products are growing rapidly across the industry
Reg Chai
On the product front, our consumer securities and standard categories are growing substantially faster than the industry average, maintaining the strong momentum established in 2023. The revenue contribution from Tuya Power's small and large home appliances grew about 75% year-over-year, in the first quarter. Notably, smart appliances such as air conditioners, thermostats, and temperature control valves driven by leading industry brands grew by more than 100%. The lighting category also experienced a healthy year-over-year growth driven by customers actively replenishing their inventories. All categories within our past portfolio entered entered into a trend of healthy growth in the first quarter of this year.
Tuya
will also become more efficient and cost-effective. This will allow them to be able to be used in mobile phones and other devices. This will enable people to interact with human beings in a more natural way. For example, through language and other methods. So we will also use the basics of our cloud platform, the genes, and the huge ecosystem of artificial intelligence, to fully invest in the research and development of artificial intelligence and AI, to get some results in the AI device experience and AI space scenarios.
Reg Chai
As a technology-driven company, we fully embraced generative AI at the beginning of 2023. The rapid iteration of generative AI technology is paving the way for the application of large models in the smart devices. Recently, STEM Ultimate mentioned on the All In podcast that new AI device will emerge with AI models becoming more efficient and affordable. This will enable their integration into devices like smartphones, allowing people to interact with AI in a more natural way, such as through voice. Leveraging our cloud platform technology and extensive smart hardware ecosystem, we are fully committed to generative AI research. We aim to achieve milestones in AI device experience and AI spatial use cases, rapidly advancing opportunities in device intelligence, spatial intelligence, and smart solutions.
Tuya
In the case of spatial automation, we will add these AI capabilities to the daily management of spatial scenarios, so that users can obtain the equipment functions and management experience of AI. The AI-driven experience of smart scenarios, or the recommendation of scenario analysis and link solutions, we will and at the Global Development Conference on May 9 next week, we will launch our own AI model, the Space Model, which is suitable for the scale of the world's large-scale smart devices. For example, the Space Model will be applied to energy-saving products. Based on the customer's IoT data and specific product needs, based on the energy consumption of real-time space, we will have the best energy-saving brand strategy for AI production.
Reg Chai
In the direction of spatial intelligence, we are integrating these AI capabilities into the daily management of spatial use cases. This allows users to experience AI-driven device functionalities and management, AI-driven smart spaces, and environment analysis with synchronized solution recommendations. At our upcoming Global Developer Conference on May 29, we were introduced to our own AI large model, the Spatial Large Language Model. Benefiting from the vast scale of smart devices within 2Di ecosystem, the Spatial Large Language Model, including the net zero carbon model used in energy saving use cases, will generate optimal energy saving and emission reduction strategies based on the real time spatial energy consumption data. This will provide leading AI technology value to customers and users in the field of spatial intelligence.
Tuya
This quarter, our smart device distribution segment has been officially branded as the smart solution
Reg Chai
after more than a year of business transformation. The smart solution segment integrates generated AI, embedded operating systems, cloud software capabilities, and our strong reputation in global markets, along with our robust control over the Chinese device supply chain to deliver high-value integrated smart solutions to our customers. For example, incorporating generative AI power voice capabilities in wearable, central control, lighting, and electrical devices, small and large home appliances, as well as mobility and energy devices enhances user interaction and efficiency significantly. In smart path devices, generative AI can also create content that adds emotional value.
Tuya
As a globalized developer platform, we also strive to integrate real-time AI technology into the product development cycle of the development platform. To bring convenience, convenience, and high-end development experience to developers, developers can use simple digital communication methods to develop a process, create UI interface, or use AI to check questions, identify and send code messages. In terms of product operation, real-time AI will also help customers to analyze the product functions of the user and make the product interested in the developer.
Reg Chai
As a global cloud developer platform, we are also committed to integrating generative AI technology into the core development processes of our platform, providing developers with advanced, convenient, and efficient development experiences. Developers can enter the development process through simple conversational interactions, generate UI interfaces, or use AI to check logs and return code suggestions. In product operations, generative AI will also help customers analyze the strengths and weaknesses of product features based on the user feedback, facilitating product improvement, iteration, and innovation. As of the end of the first quarter, the number of registered developers on our platform has exceeded one million.
Tuya
As we look forward to the rest of 2024, we are confident in our competitive age, our position with the competitive landscape, and the future of the smart technology sector.
Reg Chai
With that, I will now hand over to our CFO, Jessie, who will share additional financial details with you.
Jessie
That concludes the remarks by Jerry. As I discuss our financial results that provide more detail on the numbers that Jerry didn't cover, please note that all figures are in US dollars and all comparisons are on a year-over-year basis unless otherwise stated. In the first quarter of 2024, Our total revenue reached $61.7 million, up 29.9% year-over-year. We're surpassing the market consensus of around 15% year-over-year growth. This marked an encouraging start to the year. Including the adverse impact of exchange rates between the US dollar and IMB, the year-over-year growth would be an even more impressive 35%. Our IoT pass revenue in the first quarter was $45.6 million, representing a year-over-year growth of 35.7%. This was driven by the normalization of downstream inventory compared to the same period last year and our commitment to delivering high-value products to our customers. Regarding product categories, we saw robust demand growth across all categories. with home appliances experiencing the highest year-over-year growth of over 75%. From a regional revenue demand perspective, Europe continues to be the largest market, accounting for a little bit over one-third of the total revenue demand. The Asia-Pacific region and Latin America have seen accelerated demand growth, clearly rising compared to last year. Consequently, the Asia Pacific region around it for around one-third of the total revenue demand, while Latin America's demand contribution increased to more than 10%, a little bit shy away from 15% in the first quarter. On the customer front, we served approximately 3,000 customers in the first quarter of 2024, a slight increase from the same period last year. with the number of IoT PaaS customers remaining stable year over year. The trends in the customer number reflect our focused customer acquisition strategy. We continue to be prudent in our customer service and acquisition efforts, focusing on a targeted, strategic, and efficient method. As a result, our per-capital revenue and the per-capital growth profit saw significant year-over-year increase of about 60% to 70% this quarter. Additionally, our 12-month DBNER returned to 116% at the end of the quarter. The growth margin of IoT PaaS improved significantly year-over-year this quarter, driven by a higher proportion of higher margins products in our portfolio and to a certain extent due to the high base of inventory write-downs from the same period last year. Our smart solution segment represents an upgrade of our smart device distribution business before by integrating our GenAI and software capabilities along with our extensive familiarity with the consumer electronic supply chain We are offering smart devices enriched with our proprietary software capabilities, especially those combined with DrainAI to end users. This segment recorded revenue of US$7.5 million in Q1, an increase of approximately 37.3% year-over-year. This quarter, we continued to achieve strong results in outdoor gateway and central control devices solutions with increasingly stable customer reorders. In addition to enhance software capabilities, we saw the advantages of Tuya's ecosystem in the smart device solution business. Customers and users are willing to pay for products like smart central control and a smart watch powered by Tuya, which can easily control all their other powered by Tuya devices. The smart solution segment achieved a growth margin of approximately 28.3%, an increase of 7.3 percentage points year-over-year, with some device solutions reaching growth margin of 30% to 40%, and some even exceeding 50%. In addition, we believe that the addition of AIGC capabilities will further enhance user experience and value. Our SaaS and other sector recorded revenue of $8.6 million in the first quarter of 2024. Due to adjustments in revenue structure, it was a stable quarter. Revenue related to customized technical services decreased in Q1 due to seasonal and business positioning factors. But the growth of high-value software value-added services, such as cloud storage, remained substantial growth. The overall gross margin of SAS and others slightly decreased due to product mix and increased costs in some technical services projects, but it remained stable within our expectations. For operating activities and expenses, I will provide a detailed view on non-GAAP basis, which excludes certain items for a clearer picture of our operational efficiency. We continue to present our operating expenses primarily on a non-GAAP basis, including share-based compensation expenses and credit-related impairment losses from our GAAP figures. In Q1 2024, our non-GAAP total operating expenses decreased by 16.6 percent to $30 million from $36 million a year ago, largely due to reduced employee-related costs. as we now maintain a more streamlined team compared to the first quarter of last year. Since the start of this year, our workforce has remained relatively stable. Regarding sales and marketing activities, we increased our market and promotional budget as our revenue is on a stable growth trajectory. We will dynamically evaluate and potentially increase the budget this year to ensure effective investment in marketing and customer acquisition. This quarter, our general and administrative expenses decreased due to relatively low external professional service fees. Additionally, it is worth mentioning that MSCI recently upgraded our ESG rating to A, surpassing some industry giants. Therefore, we will continue to strengthen our efforts in ESG data security compliances and other related areas to become a more contributive company to our customers, industry, investors, and society. Overall, our non-GAAP operating loss in the first quarter of 2024 narrowed to only $600,000, nearly breakeven. Achieving such operational results in the traditionally low first quarter is very encouraging, indicating that our business and operational leverage are making significant progress under the right strategy. Regarding interest income and cash, we earned approximately $12.8 million in interest income in Q1, providing additional capital for our daily operations. This reflects our adept cash management, prioritizing the security of our principal. By the end of March 2024, our net cash position, which comprises cash and cash equivalents, bank time deposits, and US treasuries, securities totaled about $998.8 million, an increase of about $14.5 million compared to the end of 2023, despite payments for annual expenses such as employing owners in Q1. Looking ahead, we are committed to drive top-line growth, sustaining strong growth margins, and optimizing operating leverage. We believe our performance in the first quarter allows us to look forward to the future of with more optimism. With that, operator, we are now ready to take questions. Thank you.
Operator
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to withdraw a question. When preparing to ask a question, please ensure your phone is unmuted locally. Additionally, when asking a question, Please state your questions in Chinese first, then immediately translate them into English for the convenience of everyone on the call. Thank you. Our first question comes from the line of Yang Liu from Morgan Stanley. Yang, your line is open.
Yang
Thank you for the opportunity to ask a question. First of all, congratulations on the company's very strong performance. I have two questions here. First of all, I see that the income increase of the company in the first quarter is very high. That is also combined with the recent macro environment. The export situation of China is quite optimistic. So I would like to ask the management level whether there is a more optimistic expectation of income growth throughout the year, and whether it can adjust the value of income. Let me translate my questions. I have two questions. The first one is regarding the first quarter top line growth, almost 30% pretty strong. And combining that with a very solid export trend in China recently, I would like to ask management whether it's possible to raise the full year revenue guidance or turn more optimistic about the future growth. The second question is after seeing the very strong operational performance, and financial numbers, whether management can do more in terms of shareholder return and what is the current plan. Thank you.
Jessie
Thanks, Weiyang. It seems that everyone has noticed excellent export performance in the first quarter. We've observed that Chinese concept stocks with large overseas segments have in general performed well. Indeed, Tuya's growth in the first quarter particularly in our core path business, has been quite robust. Over 80% of our revenue comes from overseas, making us a prime example of cutting-edge technology company with a globalized business. Based on the data and disclosures, we see some common characteristics among strong macro factors driving exports in the first quarter. And firstly, in general, we have seen almost cross-border overseas regions demand pretty strong in Q1, especially the most dazzling growth from Asia Pacific, including like Southeast Asia, Australia, Japan, Korea, those regions. This trend aligns closely with our business development and opportunities we have observed For example, our revenue from Southeast Asia increased by approximately 70% year-over-year in the first quarter. This growth is partly due to 2S Cube Smart Private Cloud products, which has established strong replicable benchmark projects in countries like Thailand through collaborations with leading telecom operators, real estate groups, and conglomerates. and then expand to other countries in Southeast Asia. And on the other hand, the products empowered by Tuya's technology are also highly favored by end users in Southeast Asia. So our ongoing projects, which combine in private cloud and smart solutions in Vietnam with multiple Vietnam telecom operators are excellent examples. Secondly, export of home appliances and other electromechanical products, such as lawn mowers and robotic vacuum cleaners, performed very well. Consumer electronics, our main battleground, saw outstanding performance in our home appliance product line in the first quarter, with a year-over-year growth of around 75%. This has been mentioned previously. Additionally, the outdoor and cleaning robot sectors also performed excellent in the first quarter, which are areas that Tuya has previously identified and invested in. Other categories besides home appliances also show impressive growth. For example, the lighting sector, previously impacted by the inventory reduction, saw encouraging growth in Q1 as overseas customers replenish their inventories. China's supply chain and manufacturing have high efficiency and cost effectiveness, allowing products exported worldwide to meet essential needs of various customers from different regions in terms of both price and quality. Tuya plays a role in this process by leveraging its unique cloud platform and software products to support manufacturers and global brands with technology capabilities, helping OEMs serve global brands and large groups. Therefore, as end-user demand starts to recover, driving a microeconomic recovery, Tuya has already made adjustments in the past two years under adverse conditions, preparing in various aspects, such as business technology, product operations, and internal organizations. Consequently, we're more optimistic about the full year outlook now compared to the beginning of the year. Regarding the shareholder returns, we first looked at non-GAAP because it excludes items such as stock-based compensation that are unrelated to actual quarterly business and performance and do not affect cash flow. As a company, non-GAAP operating loss has essentially nearly broken even and with a very healthy cash flow status. and the gross profit developing as expected. Where now the management team are very actively exploring ways to enhance shareholder return. We hope to bring executable actions to the shareholders in the near future. That's my answer to Yang's question. We can go to the next one.
Operator
Thank you. Our next question comes from the line of Eunice Liu from Goldman Sachs. Eunice, your line is open.
Eunice Liu
感谢管理层接受我的提问。 我代表高盛分析师Timothy Zhao提问。 我的问题是关于2024年的展望。 请问公司在2024年如何平衡收入增长和利润以及对利润利率的一个展望。 Thanks, management, for taking my question. This is Eunice from GS asking a question on behalf of our analyst, Timothy Zhao. The question is on the 2024 outlook. How will the company balance the revenue growth and profitability in this year? Thank you.
Jessie
Okay. Thanks for Goldman Sachs' analyst question. Currently, and also in the past year, for the future few years, to well-balance growth and profitability is our key principle. And we also feel this is being a responsible company with long-term trajectory growth. This is the right principle. So giving our products ability to maintain their respective value proposition, we expect the path smart solutions and other segments to continue their overall chance of growth and profitability. Consequently, our overall growth margin will exhibit some structural fluctuations within a certain range, a small range, basically, depending on the revenue proportion changed among the three segments over time. After a year of adjustment in 2023, We believe our team, operations, and R&D are all well aligned. This has been validated by the per capita productivity and the customer efficiency data over the past three to four quarters. We are confident in maintaining this operational leverage, achieving customer acquisition and growth while staying efficient. For financial figures, our non-GAAP operating loss was approximately $600,000 in the seasonally low first quarter, excluding stock-based compensation and some non-operational expenditure. Our operating expenses will remain stable and controlled as revenue expands. Therefore, from the perspective of the structure of the income statement, our non-GAAP operating loss will be positively impacted by increasing revenue and the growth profit in the coming quarter. We expect to achieve quarterly non-gap operating breakeven soon in this year. So overall, we believe the IoT business still has a long way to grow. Especially, GenAI will fundamentally change or increase the value of smart products, smart space and a smart business for the end users and the customers. Given the IoT penetration rate is still relatively low and also given the competition position of Tuya are very strong, basically majority of the competitors already closed down their business in the past two and a half years. So we believe we will see a long-term growth for our business and we are confident to maintain profitability while we continue to deliver the long-term growth. That's my answer to the first question from Goldman Sachs, and we can go to the next question.
Operator
Thank you. Our next question is from Kai Xiao from CICC. Kai, your line is open.
Kai Xiao
My name is Xiao Kai, and I'm a T&T analyst. Thank you for accepting my question. I have two main questions. First, I'd like to ask about the future of IoT in 2024. I'd like to ask if we look at the IOT path, which categories are more likely to grow? If we look at the demand, where do we expect it to go beyond that? That's the first question. The second question is about AI. I see that there's a lot of layout in the AI field. Hi, this is Ben from CIS Research. So I have two questions. So my first question is regarding your IoT path. In terms of the sectors, which sector do you think will achieve stronger growth or have more potential in the past of 2024? My second question regarding AI. So in order to achieve your ambition in artificial intelligence, there is some OPEX pressure in the short term. How can we think of the how-I in the AI investment? Thank you.
Jessie
Thanks for Kai's question. Regarding your first question about a more detailed kind of forward-looking about different products growth, different categories growth in 2024. We observed that demand trends across major regions and also major categories all experienced a pretty decent growth. For example, consumer safety and essential products continue to be essential needs for end users in like Europe, North America, and also in developing regions. like Latin America, Southeast Asia. Additionally, home appliances, including both small appliances and the larger appliances, like small appliances like pet appliances, kitchen appliances, are in high demand. The rebounds of especially home appliances are pretty strong also across different regions. Also, we see that very strong demand for products like robotic vacuum cleaners and also the energy-related, like temperature control devices, which is policy-driven in Europe that, like, French government are giving out significant subsidy for all the families in French if they're in store. temperature control valves to control the heating energy consumption. And also like electrical products including switches have shown stable performance in many different regions. The last one, the lighting products which contribute in terms of quantity, the largest one in home consumer electronics by categories. After two years' pressure, the lighting products have shown a rebound due to the restocking efforts by the downstream. We believe downstream have seen that the selling to the end users will start to recover in the second half year. In terms of different regions, in 2024 for their growth. They have some slight different demands for different products. For example, Europe remains our largest revenue source. In the primary offline retail and brand-focused European market, we have gained traction by offering high-cost performance and a wide range of Tuya ecosystem products. such as energy-saving kits, compost of thermostat walls and gateways, new cost-effective lighting solutions, central control screens, and the pet appliance. So currently, Pospis in Europe is experiencing steady growth, and our smart solutions are also progressing very well in Europe. They welcome that We provide highly cost efficient but with very strong software value added proposition smart devices to sell to the end users in Europe. Southeast Asia in comparison is a newer promising emerging market with very rapid development. We target professional channels such as leading telecom operators. covering 100 million households in Southeast Asia. Currently, more than half of the telecom operators in entire Southeast Asia are in cooperation with Tuya. Using Tuya's cube plus SaaS plus smart devices as a total solution have achieved a great result. The demand for smart devices from brands or comprehensive smart business platform from corporate groups is strong in this region. For instance, Singapore has significant comprehensive energy-saving needs requiring smart meters and controllable devices, as well as effective energy-saving software algorithms. Meanwhile, telecom operators demand integrated smart platform to provide smart home-use cameras and smart water purifiers with recurring cloud storage or recurring water purifying services as their revenue source to 100 million families in Southeast Asia. The Latin American market is somewhat similar to a combination of Europe and Southeast Asia. Product demand is akin to Europe, primarily driven by our past-enabled devices. with strong demands in the first quarter. The presence of many system integrators and independent software vendors in Latin America also results in demand from telecom operators models and the comprehensive smart platform solutions. Currently, PaaS in Latin America is growing steadily. We will focus on promoting smudge solution business, which we see that the government of Latin America, both in Brazil and Mexico, they're trying to install, for example, the smudge lamps on the streets, then controlled by a SaaS business. So that's a product solution we already have that we already installed in China and in some Europe corporates so that we can promote it to Latin America. In terms of China market, due to the economic recovery, Chinese market growth is relatively slower. However, we'll continue to assist a few key opportunities the expansion of multinational customers' business in China, such as Philips projects, and e-commerce customers with product and technology capabilities targeting international markets, and extensive influence of live streaming channels selling selected high-quality products. So additionally, our main battleground for industry SaaS-based intelligence is still in China market. So for example, our smart hotel business continues to grow steadily in China in the first quarter. The business in North America is currently stable. We have introduced a smart solution into retail channels directly, and we'll continue to expand that efficiently in this segment. So overall, we are more optimistic about Latin America and Southeast Asia market. And also, we believe European market will maintain a healthy growth. In terms of GenAI, we will have a large developer conference in Shenzhen next week on May 29. We welcome all the analysts and investors to attend and can tell our IR team. So on that day, We will thoroughly discuss our efforts in GenAI on three different perspectives and to all our developers, customers, our suppliers, and partners. The first part is to apply GenAI to smart devices through some more creation that doesn't request very deep IMD investments. For example, connect ChatGPT mobile language capability to some devices that you can control devices by free mobile conversations. And that creates very interesting experiences and value for consumer uses. For example, you can describe whatever you want to the lighting products. You can talk to a speaker verbally, say that, can you create a lighting effect like a poem I like, like a song I like. and that the ChatGPT or other large language model would understand that and create a feeling that's similar to what you want. So that would be much more interesting than that set eight different lighting effects that you can only choose one of that eight in the app. And the second aspect in terms of GenAI I said we're going to release the first space model that's a net zero model, and there will be much more details in our developer conference. And the third one is we have implemented the GenAI capability in our IoT developer platform, the iot.tuya.com, that enables the developers to understand and to go through our developer platform to create differentiated products, like basically smart devices or fast services, much more effectively and quickly than before. So we're excited about this. And again, welcome everyone to join our developer conference in Shenzhen on May 29. So that's my answer to the questions.
Operator
Thank you. There are no additional questions at this time. I will now hand back to the management team for any closing remarks.
Jessie
Okay, thank you again for joining our core. If you have any further questions, please feel free to contact us or request through our IR website. We look forward to speaking with everyone in our next earning call. Have a good day.
Operator
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.
Disclaimer